IRA (Individual Retirement Account)

An IRA is a tax-advantaged retirement account individuals can open independently of an employer, with annual contribution limits set by the IRS. A traditional IRA offers a tax deduction on contributions, with withdrawals taxed as ordinary income in retirement.

IRAs offer far more investment choice than most employer 401(k) plans, which typically restrict investors to a limited menu of funds. Rolling over an old 401(k) into an IRA when changing jobs is a common way investors gain that broader access while keeping the money tax-deferred.